Unlocking Growth: The Crucial Role of User Onboarding in Scaling Your B2B SaaS Business
ildefonso prieto
Product Growth Consultant Specializing in User Onboarding for B2B SaaS Products & Apps || Converting More Sign-ups into Loyal Customers By Optimizing User Onboarding Experiences || SaasGrowers.com
If you’re like most B2B SaaS products today, then you most likely:
This means you’re probably familiar with these problems:
Let’s face it. Today’s users are impulsive and easily distracted.?
They don’t have the time or patience to try to figure out all the ins and outs of your SaaS product by themselves.
They expect the product to be intuitive, easy, and fast.
In fact, most SaaS companies don’t realize this but they are?killing?half?of their new users?before?they come back for a?2nd visit!
Stripe’s?Patrick McKenzie , highly regarded for his skills in conversion rate optimization, shares that after working on his own SaaS product and consulting with many more he detected a pattern.??
“It is very likely that 40-60% of your free trial users never see the product a second time. Which makes that first use of the software really really freaking important.”
Software products?absolutely need to focus on optimizing the FIRST EXPERIENCE of their product.
If the product doesn’t, they’re left with nothing but a retention curve that churns most new users in the first few minutes or hours of finally getting them to sign up.
This is because user onboarding will not only help you activate more free users into paying customers, but it will also move your whole retention curve upwards.?Essentially it makes your SaaS business more scalable.
Ready to make your software company more scalable through the optimization of your user onboarding??
Let’s get started.
Introduction to User Onboarding for B2B SaaS Products
Let's start by looking into what user onboarding is and how it affects different parts of your software business.
What is User Onboarding?
User onboarding is the process of helping new users successfully adopt your product.
User Onboarding is often thought of as the first experience of a product, and with good reason, because the first user experience (First UX) is one of the most iconical components of any user onboarding flow, but that’s not all user onboarding entails.
For example, onboarding old and retained customers to new components of a product because they upgraded to a higher-tiered plan.?This will happen long after they’ve been a customer and even longer than when they were free users.
Not every user will get to that level of engagement, but some will, and the user should be onboarded to the new component of the software effectively.
Now, the First UX is not only iconic and extremely important. It’s the HOLY GRAIL of B2B SaaS User Onboarding.
This is because,?in contrast?with the previous long-term engagement example,?every single user will experience the product at least one time.
The First UX has tremendous effects on users and sits at the core of the best user onboarding strategies.
If you were to identify what’s the 20% of effort that gets 80% of the results, the First UX would be that powerful 20% for user onboarding.?
The other 80% of effort that gets 20% of the results would be a long tail of growth hacks like triggered emails, notifications, checklists, rankings, and other techniques.
Ironically, most B2B SaaS products don’t focus on optimizing the first experience of a new user.?
Most do the opposite.
They buy a user onboarding SaaS product that slaps a bunch of cool shiny UI on top of their broken UX. Things like skippable tours, redundant tooltips, irrelevant pop-ups, checklists with random items, and various sales emails among other things.
Which, don’t get me wrong, could be powerful things that?support?your user onboarding.?But they won't be of much help if the SaaS product has a broken First UX, to begin with.
So it isn't inherently wrong to add these popular techniques, it's just that ultimately they serve to support user onboarding not replace it entirely.
If this sounds like something your team is doing, don't worry. Keep reading that I will tell you exactly how to fix this.
Think about user onboarding like baking a cake.
Crafting the First UX is like baking the base of a cake, and using these more granular techniques is like adding icing to the cake.
If the base of a cake is horrible, there is no icing that can save it! The cake will still taste horrible.
Instead, make sure you have baked an amazing base for your cake, then and only then, do you start to worry about adding the right icing that complements it.?
Once you have a delicious base for a cake, you will be able to find the right icing that fits your base.
And BAM!?
Now your SaaS product has a powerful user onboarding experience that helps your business become more scalable by converting more signups into loyal customers.
Ok so we talked about the basics of what user onboarding is, but why is it so important for B2B SaaS products?
Why is User Onboarding crucial to SaaS Products?
Well.. for a lot of reasons really
Simply put – because their business depends on it.
Sean Ellis, the pioneer who coined the term growth hacking has this to say about user onboarding:
“Most growth problems start in the onboarding when people signup & leave.” – Sean Ellis
This short-lived moment in the journey of your users is?the moment that will make or break your product.
It's the moment in which a newly signed-up user will judge if your product is what will solve their problems or not.
In mere minutes of signing up for your SaaS product, if the user isn't convinced that you're the solution to their problem then they are GONE.
In most cases, they leave to browse and sign up for competitors!?
And which product will win that battle?
The product that in just a few minutes can give the new user that amazing first impression that ultimately convinces them that this product is the solution to their problem.?
User onboarding sits at the foundation of growth for software products.?
Get it right and it's like magic that helps your business scale!
Get it wrong and it's like a plague that eats away all of your growth...
Let’s break down the different ways an effective user onboarding flow helps b2b SaaS products become more scalable.
Activation Boost – Convert More Free Users into Loyal Customers
You have a slim chance to show your new users value, if you take too much time they won’t upgrade, you will never get paid and you will potentially lose them forever (in many cases to your direct competition).
You can have the best Acquisition channels in place, getting your product enormous amounts of new trials.?
But if little to none of those trials convert into paying customers then all your effort and resources will simply become data to analyze and not money for more growth.
User onboarding specializes in getting new users to experience the core value of your software, which in turn is the best possible way to get them to start paying a small fraction of the enormous value your SaaS product provides.
Acquisition Boost – Lower your Customer Acquisition Costs (CAC)
Every successful SaaS product knows about its CAC.?
Simply put - Grab all of your expenses to acquire customers and divide it by the number of new customers acquired by those efforts.
Sometimes it can get complicated when tracking the data, but for the sake of simplicity, think of this example:
If your company spent $1,000 on marketing through Google ads during the last month, and those efforts yielded 10 customers, then your CAC would be 100$.?
$1000 in ads / 10 customers = $100 CAC?
In other words, if your company spends 100$ on Google ads you technically should be able to get 1 new customer.
So the cost to acquire 1 customer is $100.
Cool.
If you improve your user onboarding flow, you will get more customers out of the same $1,000 advertising budget.
You will end up getting more bang for your buck.?
Imagine you get 15 customers instead of 10 now with the same $1,000 advertising budget.
$1000 in ads → 15 customers =? $66 CAC?
That would make your CAC decrease from 100$ to $66.
Do I even need to ask which one would you prefer your business to have??
Now, lowering CAC is great and all…
But you know what's even better?
When you combine these improvements with improvements in retention.
Guess what helps with retention too??
You guessed it, user onboarding.
Retention Boost – Improve Week 1 Retention Rates amp; Reap The Benefits Long-Term
This is what a good retention curve looks like:
During the initial weeks, churn is relatively high, and then over the course of a few weeks, it flattens out leaving you with the number of users that your product has retained.
Dan Wolchonok — Head of Product and Analytics at Reforge (and formerly of HubSpot)— in?his talk at Price Intelligently’s SaaSFest conference (2015) , talks about two main ways to improve Retention Curves:
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It’s important to note that your product should start by making the retention curve flatten out at the end, before looking into moving the whole curve upwards.?
If your retention curve doesn’t flatten out then it means that your SaaS product is a never-ending-churn machine that doesn't retain anyone and is constantly bleeding all of its users.
How do you make sure your retention curve flattens out at the end?
You need to have an amazing product that people love to use because it solves whatever problem your SaaS product solves.
What we’re more interested in helping you do today, is the 2nd way of improving a retention curve:?
Moving the whole retention curve upwards.
Let’s look at the example Dan Wolchonok talks about in his presentation, one of the products HubSpot acquired – Sidekick – that became integrated into several parts of HubSpot.
While looking at their retention analytics Dan noticed that most new sign-ups were what he called “Drive-by” Users.
Users would sign up, and play with the product a little bit only to leave and never come back.
He was so curious about this data that he decided to do some more research.?
He emailed all the signs up that churned on week 1 asking them one simple question:?
“Could you tell us why you decided not to continue to use Sidekick?” These were the results:
60% of people either?didn’t see the value?of the product or?didn’t even understand what the product was about.
Cool! At least now they had an idea about the reasons why so many people leave after doing so little!
With this feedback, Dan went into experimentation mode!
Dan and his team tried experimenting with adding some explanation to why their dashboard was blank, addressing their blank states:
That failed…
They added fake activity, or dummy data, in their feed so that users knew what was going to happen in the future, and even added tooltips to explain everything.
That failed too…
They added a video tutorial that explained the product and showed them the value they could get out of it.
Also failed…?
But Dan knew that failure was part of success so he just kept experimenting...
After 7 failed experiments later…Dan struck gold!
What worked on this final attempt?
They focused on helping new signups to set up Sidekick as quickly as possible so that they could experience the value that was being promised.
This way new users could?understand what the product did, AND?experience the value for themselves.
Essentially, he improved the user onboarding flow of their product. It's just that they didn't call it user onboarding back then.
The result? Magic!
More users understood the product, experienced the value being promised, and became regular users of the product.
Their Week 1 retention rates had significantly improved!
But not only that…?
The mind-blowing thing?that happened was that?by improving Week 1 retention rates, he was able to improve the retention rates of the following weeks as well!
This is because he discovered that?improvements in Week 1 retention rate will cascade over time!
They managed to move the entire Retention Curve Upwards!
This has a deep and positive impact on the long-term health of a SaaS business.
This upward movement early in the retention curve signals that the SaaS company can activate users more efficiently and therefore retain more users long-term.
"In working with a number of SaaS portfolio companies, I have found that there are two causes of churn that occur more frequently than any others.They are: failure to successfully onboard the customer and loss of the champion who drove the purchase. "– David Skok, General Partner at Matrix Partners
I have another study for you, that supports this idea and more.?
This one was made by Patrick Campbell during one of his?“Profitwell Report” episodes .
This episode is framed around questions that were asked by the audience. Patrick Campbell and the Profitwell team take these questions and try to answer them using data.?
There was this question by?Jonathan Kim, founder of?Appcues, who wanted to know:?
How does a company’s onboarding impact?customers' willingness to pay?&?retention?
He had this to say about the impact of user onboarding on retention:
“Retention is where things get really interesting. When comparing the first 60 days of customers with poor perceptions of onboarding to those with positive perceptions, those?customers with positive perceptions have much less drop off in the first 21 days of being a customer.”
They experimented and also found out that?“great onboarding boosts overall retention”, specifically in those first 21 days from sign up.
The ProfitWell team also concluded that a great user onboarding experience?improves the “willingness to pay” of a new user!
“Those customers who perceived a company’s onboarding positively had between a 12% and 21% higher willingness to pay than the median. Those on the negative side had a 3% to 9% drop in willingness to pay, indicating that poor onboarding doesn’t necessarily detract too much, but can certainly miss out on some large willingness to pay gains.” (...) Those with purely functional, but well-perceived onboarding, did boost willingness to pay for the product between 8 and 17 percent, but?those who additionally?focused on value squeezed roughly another 10% in terms of willingness to pay.“
-?Neel Desai,?Product Lead, ProfitWell
After seeing how user onboarding flows impact the Acquisition, Activation, and Retention of a SaaS product, you may be able to see what comes next.
All of these benefits combine to make a B2B SaaS Business more scalable.
Acquisition Boost + Retention Boost + Activation Boost = More Scalable B2B SaaS Business
If your business now:
Then your CAC to LTV Ratio significantly improves,?which makes your business become way more scalable!
That’s why user onboarding is crucial to any SaaS product, because not only does it improve activation, but it also sets the stage for everything to come.
User onboarding sits at the foundation of growth for a SaaS business.
Get it wrong and you will have growth problems all over the place: poor retention rates, low trial-to-paid conversions, decrease in revenue, high CAC, and ultimately a product that isn’t scalable.
Get it right and it’s like magic.
Now you know why user onboarding is crucial for any B2B SaaS product.
Want some help optimizing your user onboarding?
Send me a message here on Linkedin, or Schedule a free consultation call with me!
Best regards and farewell.
Founder @ Pink Media | Digital Marketing
9 个月Ildefonso, Thanks for sharing!